Question Period Note: COMPENSATION FOR SUPPLY-MANAGED SECTORS

Q1 – How much compensation is being provided to members of the sector? Q2 – What are the details of the CUSMA compensation? Q3 – What are the details of the Dairy Innovation and Investment Fund?

R.1 - A total of up to $4.8 billion is being made available to support dairy, poultry and egg producers, and processors for the impacts of recent trade agreements:
• Up to $3.2 billion for dairy farmers through the Dairy Farm Investment Program and the Dairy Direct Payment Program;
• Up to $803 million for poultry and egg producers through the Poultry and Egg On-Farm Investment Program and the Market Development Program for Turkey and Chicken;
• Up to $497.5 million for processors through the Dairy Processing Investment Fund and the Supply Management Processing Investment Fund; and
• Up to $333 million for the Dairy Innovation and Investment Fund. R.2 - Through the 2022 Fall Economic Statement, the Government announced $1.75 billion in compensation to supply-managed sectors for the impacts of CUSMA, as follows:
• Up to $1.2 billion to Canadian dairy producers under the Dairy Direct Payment Program.
• Up to $112 million to the Canadian poultry and egg producers under the Poultry and Egg On-Farm Investment Program.
• Up to $105 million to support investments in dairy, poultry and egg processing plants under the Supply Management Processing Investment Fund.

To further compensate the dairy sector, Budget 2023 proposed to invest up to $333 million for a new program, the Dairy Innovation and Investment Fund, to support industry efforts to manage the surplus of solids non-fat. R.3 - • The new Dairy Innovation and Investment Fund will provide non-repayable contributions to Canadian dairy processors to help the sector modernize, replace and increase solids non-fat processing capacity and minimize non-marketed skim milk.
• The Canadian Dairy Commission will deliver the Dairy Innovation and Investment Fund on behalf of Agriculture and Agri-Food Canada.
• The two-stage application process commenced on September 29, 2023. The program will also consider costs eligible for reimbursement retroactive to November 17, 2022.
• The Dairy Innovation and Investment Fund is the last step in fulfilling the Government's commitment to full and fair compensation for supply-managed sectors for the impacts of the recent trade agreements.

The Comprehensive Economic and Trade Agreement (CETA) came into force on September 21, 2017, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force on December 30, 2018, and the Canada-United States-Mexico Agreement (CUSMA) entered into force on July 1, 2020. The trade agreements offer significant opportunities for the Canadian agriculture and agri-food sector, while creating some challenges due to new market access for supply-managed poultry, egg, and dairy products. In recognition of this, the Government committed to provide full and fair compensation to supply-managed sectors for the impacts of recent trade agreements. The Government worked closely with the sector to develop the compensation approach.

In June 2022, the Bloc Québécois introduced Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act. The bill would block any future governments from increasing the tariff rate quota for dairy, poultry, or eggs, and would also prevent any subsequent governments from further opening the Canadian market to foreign producers as part of any future trade agreement negotiations. Bill C-282 has successfully passed through the House of Commons and passed its second reading in the Senate. Following its second reading, the Bill was sent to committee for further study.

Current Status

The Government is delivering on its commitment to provide full and fair compensation for the impacts of CETA, CPTPP and CUSMA, which includes:

• Up to $3.2 billion for dairy farmers:
o $250 million through the Dairy Farm Investment Program
o $2.95 billion through the Dairy Direct Payment Program
• Up to $803 million for poultry and egg producers:
o $759 million through the Poultry and Egg On-Farm Investment Program
o $44 million through the Market Development Program for Turkey and Chicken
• Up to $497.5 million for processors of supply-managed commodities:
o $100 million through the Dairy Processing Investment Fund
o $397.5 million through the Supply Management Processing Investment Fund
• Up to $333 million for the Dairy Innovation and Investment Fund
o Total funding includes $300 million provisioned through the 2022 Fall Economic Statement and up to $33 million in unclaimed Dairy Direct Payment Program funds for the last year of CETA/CPTPP programming and all years of CUSMA.

In total, the Government has announced just over $4.8 billion dollars in compensation to supply-managed sectors for the impacts of the three trade agreements.

Dairy Farm Investment Program
The Dairy Farm Investment Program was a $250 million program launched to help Canadian dairy farmers update farm technologies and systems, and improve efficiencies and productivity through upgrades to their equipment to compensate for the impacts of CETA. The six-year program began on 2017-18 and was extended to close on March 31, 2023, to accommodate producers impacted by COVID-19.

 
Dairy Direct Payment Program
The Dairy Direct Payment Program provides up to $2.95 billion over 10 years to cow milk producers to help them transition to new market realities due to recent international trade agreements. While there are no applications to complete under the program, producers must register by March 31 of each year for the program and indicate acceptance of the payment. These funds will give producers the flexibility to invest according to their individual needs. For example, from 2024 to 2029, an owner of a farm with 80 milking cows may receive a total direct payment of about $106,000 over six years. The program started in 2019 and ends March 31, 2029.

Poultry and Egg On-Farm Investment Program
The Poultry and Egg On-Farm Investment Program announced in 2021 provides close to $759 million to support poultry and egg farmers through on-farm investments that increase efficiency or productivity, respond to consumer preferences, or improve on-farm safety, biosecurity or environmental sustainability. The program opened for applications on May 31, 2021 and ends March 31, 2031.

Market Development Program for Turkey and Chicken
The Market Development Program for Turkey and Chicken announced in 2021 provides up to $19 million for the Turkey Farmers of Canada (TFC) and up to $25 million for the Chicken Farmers of Canada (CFC) over a ten-year period. Funding will help increase domestic demand and consumption of Canadian turkey and chicken through industry-led promotional activities such as advertising campaigns, market research or product development. The continuous intake period for applications was launched on April 13, 2021. The program ends March 31, 2031.

Dairy Processing Investment Fund
The Dairy Processing Investment Fund was a $100-million program aimed to increase the efficiency, productivity, and competitiveness of Canadian dairy agri-food processors and mitigate the impacts of recent international trade agreements. The four-year program began in 2017-18 and was extended to close on March 31, 2022, to allow recipients impacted by COVID-19 to complete their projects.

Supply Management Processing Investment Fund
The Supply Management Processing Investment Fund is an up to $397.5 million program that supports investments in dairy, poultry, and egg processing facilities to improve productivity and/or efficiency through the purchase of new automated equipment and technology. The program ends March 31, 2028.

Dairy Innovation and Investment Fund
The new Dairy Innovation and Investment Fund will provide Canadian dairy processors with up to $333 million in non-repayable contributions over 10 years to help the dairy sector better manage the surplus of solids non-fat (SNF) in Canada. The program will support activities that help modernize, replace and/or increase processing capacity for SNF and minimize skim milk that is not marketed. The program opened for applications on September 29, 2023. Supported projects have not yet been initiated or announced. The program is set to end on March 31, 2033.

• The Government strongly supports supply management and has delivered on its commitment to provide full and fair compensation to producers and processors in the sector for the impacts of recent trade agreements.

• Through the 2022 Fall Economic Statement, the Government announced up to $1.75 billion in further compensation to supply-managed sectors for the impacts of the Canada-United States-Mexico Agreement (CUSMA).

• In total, up to $4.8 billion is being made available to support dairy, poultry, and egg producers, and processors for the impacts of the Canada-European Union Comprehensive Economic and Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and CUSMA.